PRA Regulatory Fees and Levies - Rates: 2015/2016

Response to the consultation

Firstly, on behalf of our members we wish to express our strong support for the continued proportionate regime for the smallest credit unions through the retention of the special minimum fee structure. Credit unions operate under a uniquely-low interest rate cap of 3% per month, and as a sector are deeply involved in offering fair and affordable financial services to those unable to access such services elsewhere. As a young and developing sector operating under tight margins and serving the financially excluded, and at a significantly smaller scale than their competitors, small credit unions are disproportionately impacted by regulatory costs and we are grateful that the PRA has shown proportionality in this case.

Secondly, we also strongly support the fee premium paid by the largest and most systemically important banks in the deposit-taking class. These firms receive much in the way of additional oversight and scrutiny from the regulator; therefore it is fair and proportionate that these firms continue to pay higher fees in accordance with the additional risks they pose and the financial costs that therefore arise from regulating them as systemically-important financial institutions. This also has the effect of reducing the burden on smaller financial firms who require less attention and can be resolved with little to no impact on the soundness of the rest of the sector.

Thirdly, whilst we are broadly satisfied with the PRA’s proportionate approach to the fee structure we must express some concern at the increasing ongoing costs of the PRA and their effect on fees. We acknowledge the vital regulatory work the PRA undertakes; however, the proposed cost of ongoing regulatory activity for the PRA has increased 22% since 2013. If costs continue to rise at this pace, the PRA fees levied will place a significant financial burden on to the firms it regulates. We hope that in future years we can support more modest fee increases from our maturing regulatory body.

You can download the PDF version of the consultation response on the right hand side.